Energy bill cuts? Don't hold your breath

Clancy Yeates

Casual observers of politics might have formed the impression the carbon price is the main reason energy prices have surged in recent years.

If this were the case, scrapping the carbon price should deliver big savings in electricity and gas bills, right? Afraid not. And that means if you want a better deal on power prices, don't expect this to come from a federal government decision, no matter what the politicians claim.

The truth is, the carbon price has only played a small part in the price hikes passed on to customers. So even if the Senate abolishes it this month as expected, consumers will not automatically pocket big savings.

There's no escaping the surge in electricity costs, which have roughly doubled since 2007. But the main reason they've risen so much are the costs of maintaining the network - the "poles and wires".

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The good news is these costs have finally stabilised. In fact, power prices are predicted to fall in some states this year, even if you assume the carbon tax stays in place.

The Australian Energy Markets Commission estimated in 2013 that retail power prices would actually fall over the next three years in NSW, the ACT and South Australia, with little movement in Victoria, Tasmania and Western Australia.

For further proof of the minimal role of the carbon tax, look at gas prices. These are predicted to surge by a whopping 17.6 per cent between 2014 and 2016 in NSW, with significant increases in other states too.

But once again, this has little to do with the carbon price, and everything to do with a gas export boom that is forcing up the domestic price of gas.

So what can consumers do to limit the impact of rising gas prices, and limit the damage caused by higher electricity costs?

Aside from reducing your use of energy, shopping around can lower costs.

Ben Freud, chief executive of price comparison website GoSwitch, says retailers are offering discounts of up to 10 per cent for gas and electricity customers who are prepared to switch providers. The best deals are often with smaller retailers, he says.

"The major retailers control the market. The bigger discounts are available with retailers that don't have a well-known brand so they have to attract customers with a better price," he said.

Just as banks, super funds and insurers offer the best prices to customers who move around, so it is with energy retailers. Even a phone call to your existing supplier can pressure them into lowering their prices.

Just don't assume that government decisions in Canberra will produce dramatically cheaper power bills.